Postal Services Bill — Second Reading — 27 Oct 2010 at 18:39

The majority of MPs voted to prepare Royal Mail for privatisation; to change the law to enable the Secretary of State for Business to sell the nation's interest in the company; to change the rules relating to Post Office's shares enabling the establishment of an employee share scheme and possible mutualisation; and to change the regulation of postal services, particularly to protect the UK's universal postal service.

MPs were voting on if the Postal Services Bill^[1][2][3] should be read for a second time. ie. if it should continue on its path to becoming law.

• Royal Mail is the company which delivers letters, providing a "universal service" to the UK.
• The Post Office is the company which runs the network of Post Offices.

The Government are proposing preparing Royal Mail, which is currently owned by the state^[4], for a possible sale (privatisation). The Bill contains provisions which would change the rules on Royal Mail share ownership, and nationalise substantial pension liabilities. These proposals are intended to permit and encourage private sector investment in Royal Mail; in the words of Business Secretary Vince Cable to: "provide a framework in which a sale could take place"^[5].

The Post Office Limited is a wholly owned subsidiary of Royal Mail Group Ltd, which in turn is a wholly owned subsidiary of Royal Mail Holdings plc.The Government owns 100% of Royal Mail Holdings plc.^[6] The Bill contains provisions introducing an employee share scheme within the Post Office and permitting mutual ownership (ownership by staff, customers and other interested parties) in the future.

Details of provisions contained within the Postal Services Bill:

• Accrued Royal Mail Pension Plan liabilities (of 10.4 Billion^[7]) are to be taken on by the Government.
• Restrictions on issuing shares in Royal Mail companies, currently in place under Sections 65 to 67 of the Postal Services Act 2000 are to be repealed.
• Restrictions on ownership of Post Office Ltd shares are modified to provide for employee share ownership and a possible move to a mutual ownership structure in future. (Mutual ownership would be ownership by those with an interest in the company eg. staff, customers, and the Government).
• An employee share scheme is to be set up within the Post Office
• A report to Parliament is to be required should the Government decide to sell off any of its shares in Post Office companies.
• Responsibility for regulating the Post Office is to move from Postcomm to OFCOM.
• Provision is made for a "special administration regime" to protect the continuation of the universal postal service in the event of the service provider being at risk of entering insolvency proceedings.
• [1] The Postal Services Bill page on the Parliament website
• [2] Text of the Postal Services Bill as introduced - dated 13.10.2010
• [3] Explanatory Notes to the Postal Services Bill prepared by the Department for Business, Innovation and Skills
• [4] Shareholder Executive webpage on Royal Mail
• [5] Vince Cable, House of Commons, 27th October 2010
• [6] Shareholder Executive webpage on the Post Office
• [7] Brian Binley MP, House of Commons, 27th October 2010

Debate in Parliament | Source |